corsa.in.boro
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Registered: 30th Aug 02
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Im currently looking at getting an 80k mortgage, the mortgage broker can get my monthly payment very low on interest only!!
Is it a big mistake to go with an interest only, and could i do it for say 2yrs then switch to a repayment?
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broster
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Registered: 6th Dec 02
Location: Drives: E39
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i wouldnt bother looking at interest only myself.
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Russ
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Registered: 14th Mar 04
Location: Armchair
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dont even consider it, my mates doing it with his mrs. in 25 years, they wont own there house...
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corsa.in.boro
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Registered: 30th Aug 02
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can i just switch it in 2 yrs when i can afford it?
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Jules S
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Registered: 24th Dec 03
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quote:
Originally posted by corsa.in.boro
can i just switch it in 2 yrs when i can afford it?
That's basically the idea. It's never a good idea to go interest only for a long period of time.
Obviously you pocket the increase in the value of the house (if it increases) when you are only paying the interest 
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corsa.in.boro
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Registered: 30th Aug 02
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^^Interesting!!
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corsa.in.boro
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Registered: 30th Aug 02
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it can make a £100+ difference a month, and with today's stupid prices its necessary.
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Jules S
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Registered: 24th Dec 03
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Funnily enough, my partner has 80k interest only.
What are you looking at paying per month?
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corsa.in.boro
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Registered: 30th Aug 02
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380 over 25yrs
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Jules S
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Registered: 24th Dec 03
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quote:
Originally posted by corsa.in.boro
380 over 25yrs
not a million miles away then.....she is paying £371
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Mad Moe
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Registered: 14th Jun 01
Location: Northumberland
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I'm looking at interest only at the moment, however I intend renting the property for 2yrs and then selling it on for a tasty profit
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Rob_Quads
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Registered: 29th Mar 01
Location: southampton
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To say don't bother IMO wrong
Also saying in 25 years you will not own anything is wrong - you will just owe the original amount BUT think about it.
Lets say 100K house - it will be worth ? 1 mill+ in 25 years, you will be earning 200K year maybe so to pay off a 100K dept is not exactly hard.
Your better off getting a house and going interest only for a few years then moving it to repayment than renting and then going for a repayment.
The only thing that would threaten an interest only mortgage is if there was a huge drop in prices and you were made redunant.
At least the house prices are going to stay the same but more than likely still go up over the next few years all beit slower than the last few years.
I bought my house 2 years ago on interest only. I have just moved to repayment and it was the best thing I could have done. I would never have been able to afford a repayment mortgage when I bought, if I had have waited till now to buy I would have had to buy 1 room less due to the higher prices.
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Colin
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Registered: 4th Apr 02
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Dont you need to prove you have some form of endowment policy to get an interest only mortgage???
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Rob_Quads
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Registered: 29th Mar 01
Location: southampton
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Thats the theory (well and the law that the mortage company is meant to check) but in the real world no they don't bother.
Even if they did you often just need to tick a box saying you will start up an ISA or something. If you don't the only time its going to matter is if you don't start paying the mortage and they want to screw you over...but thats fairly easy for them anyway as they will just take the house so they are not really bothered TBH
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whitter45
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Registered: 15th Nov 02
Location: Norton
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consider a part repayment part interest but inall honesty monthly payments drop only slightly
In all honesty if you can afford it go repayment.with interest only most lenders will ask yo uto set-up a saving scheme type programme to prove yopu will have 80k in 25 years to pay the loan off
Its your call I have repayment myself
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Ally
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Registered: 2nd Jul 03
Location: Pontypool Drives: a Skoda
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I have interest only, plan was to buy house, rennovate, sell then take the profits and buy a bigger house with the profits (as the deposit so i could get a bigger mortgage) and switch to repayment on the bigger house and stay there for 5 years+
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Ally
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Registered: 2nd Jul 03
Location: Pontypool Drives: a Skoda
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My mortgage is £67k @ £300.66 a month, repayment would of been £398
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Fee
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Registered: 16th Nov 05
Location: With AK
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It really depends on what you're plans are for it.
If you are only planning on keeping it for a few years then go interest only.
With a repayment mortgage, you pay the interest off first....so the payments for the first few years will be the interest, and you won't actually start paying off the mortgage for 2-3-4 years.
If it's more long term, then go for a repayment.
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John_C
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Registered: 5th Mar 03
Location: South east, Bromley
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my plan is the same as ally.
mortgage payment interest only 576, repayment would have been 790 ish i think
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Rob_Quads
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Registered: 29th Mar 01
Location: southampton
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quote:
Originally posted by Fee
It really depends on what you're plans are for it.
If you are only planning on keeping it for a few years then go interest only.
With a repayment mortgage, you pay the interest off first....so the payments for the first few years will be the interest, and you won't actually start paying off the mortgage for 2-3-4 years.
If it's more long term, then go for a repayment.
This is not true of most mortgages I have just looked at going through the whole remotgaging process. (in fact not a single one)
If its a repayment mortage you will be paying off some of the capital from the start. The difference is in the first few year the large % of the payment is the interest i.e. Lets say 700/month for 25 years. For the first year you might be paying around 500 towards the interest repayments and only 200 of the balance. Towards the end as you will owe less you will be paying off 650 of the balance and only 50 of interest.
By moving to repayment on a 160K mortgage the first year I will be paying off 4K of the balance. It all counts.
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Andrew
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Registered: 5th May 04
Location: Skoda Octavia Estate, Ford Puma
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Is it possible to get an intrest only morgage and pay a lump sum in once a year?
My Dad sorted mine out years ago..
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--Dave--
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Registered: 17th Feb 04
Location: Essssseeeeex Drives: Black Supra TT
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quote:
Originally posted by Russ
dont even consider it, my mates doing it with his mrs. in 25 years, they wont own there house...
this comment made me laugh.
do you own a house Russ?
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Russ
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Registered: 14th Mar 04
Location: Armchair
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quote:
Originally posted by --Dave--
quote:
Originally posted by Russ
dont even consider it, my mates doing it with his mrs. in 25 years, they wont own there house...
this comment made me laugh.
do you own a house Russ?
will do in a few week,s signing contracts soon.
ok so my commment was a little ott  but for me, im buying a house for me my partner and one day our adopted kids (gay couples cant naturally have children iirc). so most people who are buying a house to live in for long periods may be better off with a repayment mortgage.. maybe
/gets coat
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Ally
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Registered: 2nd Jul 03
Location: Pontypool Drives: a Skoda
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Long stay = repayment
Short stay/rennovating to sell on etc = Interest only
Long stay = Over 3/4/5+ years
Short stay = 1 - 3 years
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Kerry
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Registered: 5th Oct 01
Location: Norwich
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quote:
Originally posted by Andrew
Is it possible to get an intrest only morgage and pay a lump sum in once a year?
My Dad sorted mine out years ago..
Depends on the lender
Some allow it some dont and some allow you to do it up to a certain % of the borrowing over that and you have to pay a penalty
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